ORDER
G.R. Sharma, Member (T)
1. The captioned appeal is directed against the Order-in-appeal dated 21-8-1987 passed by the Collector (Appeals). The Collector (Appeals) in his order, had held “Appellants are liable to pay duty on the paper and paper board cleared for manufacture of core pipes as they are not covered by the Notification No. 62/82 as amended by Notification No. 48/83 and 79/86. The Notification is specific for manufacture of paper and paper board and core pipes are neither paper nor paper board. As such the duty is leviable and the order of Assistant Collector is not maintainable.”
2. The facts of the case are that the appellants are engaged in the manufacture of paper and paper board. They also manufacture core pipes. For manufacture of core pipes, they use paper manufactured by them. Core pipes are used captively for winding of other varieties of paper. A controversy arose whether duty should be demanded on the paper used in the manufacture of core pipes as alleged by the department or duty cannot be demanded on core pipes as they were manufactured in a continuous process as claimed by the appellants. Show cause notice was issued to the appellants. The appellants submitted in reply to the show cause notice that paper was used in the manufacture of core pipes and core pipes were further used for winding paper. It was contended by the appellants that since it was a continuous process and since core pipe was a component used in the manufacture of paper which was finally cleared in the form of rolls and since the product finally cleared by them was paper, therefore, no duty was payable on paper used in the manufacture of core pipes. After hearing the submissions of the appellants, the ld. Asstt. Collector rejected the contentions of the appellants and held that Notification No. 62/82 as amended by Notification No. 48/83 and 79/86 did not cover the aspect inasmuch as the exemption was available only on paper used in the manufacture of paper.
3. This finding of the ld. Asstt. Collector was upheld by the Collector (Appeals).
4. Shri C. Chidambaram, the learned consultant appearing for the appellants submits that Notification No. 62/82 as amended fully covers their case inasmuch as the final product cleared by them was paper and the product which was used initially in the manufacture of this was paper. He submits that core pipe is an intermediate product since the process is a continuous one, therefore, they are eligible to the benefit of Notification No. 62/82 as amended. In support of his contention the ld. Consultant cited and relied upon the decision of the Apex Court in the case of Star Paper Mills Ltd. v. C.C.E. reported in 1989 (43) E.L.T. 178 (SC). He submitted that the Apex Court formulated the issue thus : “the third point only which therefore, arose for consideration in the case is whether paper core is used in the manufacture of paper as component part” and held that paper core is a component part in the manufacture of paper rolls. The ld. Consultant submitted that their case was fully covered by this decision of the Apex Court.
5. Shri J.M. Sharma, the learned DR submitted that we are concerned with the short issue whether duty should be demanded on the paper used in the manufacture of core pipes. Reading the Notification No. 62/82 as amended, the ld. DR submits that we have to follow the Notification strictly; that the words used in the notification are that the Central Government exempts, “paper and paper board produced out of pulp falling under Chapter Heading 48 from the whole of duty of excise leviable thereon if such paper or paper board is used within the factory of production for further manufacture of paper or paper board.” He submits that in the instant case, the paper has been used in the manufacture of core pipes. He submits that core pipes are classifiable under Chapter Heading 4818.19; that thus core pipe cannot be termed as paper or paper board; that it is an article of paper and was classifiable as such; that there is no dispute about classification of this item. He therefore, submits that the Notification, namely, Notification No. 62/82 as amended, does not cover the case of the appellants and that the lower authorities have rightly-demanded duty.
6. The ld. DR also distinguished the case cited and relied upon by the appellants. He submitted that the issue before the Apex Court in that case was that of availment of set-off of duty paid on raw material/component under. Notification No. 201/79. He submitted that the issue dealt with by the Apex Court was whether core pipe was a component for the purpose of set-off or not and that the Apex Court rightly held that core pipe was a component. He submitted that in the present case, the issue is not that of component or set-off of duty and therefore, the facts in the case are different and the decision of the Apex Court is clearly distinguishable.
7. Heard the submissions of both sides. We find that the short question for determination before us is whether duty is payable on the paper used in the manufacture of core pipes. We have heard the pleadings of the ld. Consultant for the appellants saying that core pipe is an intermediate product and that the process of manufacture in which core pipe is produced is a continuous process. We find that core pipe is a distinct product which is classifiable under Tariff Item 4818.19. Reading the Notification under which the concession has been claimed shows that only that paper and paper board is exempted from payment of duty which is used in the further manufacture of paper and paper board. In the instant case, we find that paper has been used in the manufacture of core pipes. Core pipe cannot be termed as paper. It is an article of paper. Construing the meaning of the word ‘use’ in the exemption Notification strictly, we find that core pipe is not paper and therefore, paper used further in the manufacture of core pipe is not covered by the Notification.
8. The ld. Consultant completely relied upon the judgment of the Apex Court in the case of Star Paper Mills Ltd. (supra). We have heard the learned DR also on this issue and we find that there is force in what the learned DR stated. We find that this decision of the Apex Court is based on facts which are entirely different and the notification also is a different notification and not in pan materia with the notification with which we are concerned. We find that the judgment of Apex Court in the case of Star Paper Mills Ltd. is clearly distinguishable.
9. Having regard to the above discussions we hold that duty is payable on the paper used in the manufacture of core pipe. In the result, the impugned order is upheld and the appeal is rejected.